Deal focus: Innotech realizes global ad tech ambitions

When Shanghai-based Innotech Group was established two years ago, its remit was clear: build the largest advertising technology (ad tech) ecosystem in the world. There were two strands to this strategy: a domestic incubation program; and an M&A drive to expand its geographic footprint.

Innotech Capitals was launched six months after the parent and tasked with making investments from early-stage rounds to full M&A. While the early-stage portfolio is not restricted to ad tech – it features 40 start-ups targeting everything from financial technology to tele-medicine – growth equity and buyout investments must relate to the company's core business. More than $100 million has been deployed on the PE side across four deals.

The most recent addition to the portfolio is US-based Ad-Juster, a data aggregation platform. As part of the agreement, Innotech will help the company grow its user base in China. The GP will also support Ad-Juster's efforts to extend its product catalogue into ad optimization, quality measurement, cross-enterprise reporting and dash boarding services, and internationalize its business through synergies with other portfolio companies in the ad tech space.

"This is the first significant investment we have made in the US," says Oliver Chen, founding partner of Innotech Capitals. "There is no technology in China that comes close to what Ad-Juster is doing right now, so there is no competition. We plan to bring the product offering into China first because that's where we feel most comfortable with our resources and connections."

Founded in 2007, Ad-Juster enables digital publishers, ad agencies and ad tech platforms to source information from multiple third-party systems, automating manually intensive daily reporting processes and improving data visibility with a view to bringing down costs and assisting decision making. It claims to help clients reconcile close to $10 billion in revenue per year.

Apart from e-commerce platforms and enterprise software providers, most internet companies are reliant on advertising services for revenue. Although Google and Facebook are currently the dominant players in digital advertising, Chen believes there is room for specialists to get traction in a market that remains highly fragmented.

"The ad tech ecosystem comprises advertisers at one end and publishers at the other. In between there are players operating at different points along the value chain. For example, there are agencies that aggregate advertisers' budgets so that they can more effectively negotiate with publishers over ad inventory," he explains. "What we're doing right now is integrating the upstream and downstream parts of that ecosystem."

With this ecosystem maturing in China, Chen also expects to see more overseas acquisitions in the ad tech space. The most recent significant example is the $1.4 billion purchase of US app marketing start-up AppLovin by a fund with links to Orient Securities. 

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• Topics
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